http://en.wikipedia.org/wiki/Watertown,_Wisconsin
Read down, a railroad bond fund default by a city.
They did their own CDO, packaged up a bond that was for sure going to default, and then sold that crap off to some outsiders (well makes a good story anyway). Then the city defaulted on building the railroad, railroad went bankrupt, and then the city completely dissolved the government so that there was no person who could be served with a suit.
The bondholders were mad and chased them all the way to the Supreme court, who decided, you guys don't get diddly.
The year ---
1855, and influenced by the Panic of 1857
the debt-financed reprieve from the consequences of soaring debt burdens has only hidden the problem for a time. but once the economy goes back into recession, we will once again have to consider allowing states, not just municipalities, to go bankrupt.
ReplyDeletehttp://www.nationalreview.com/articles/253981/let-states-go-bankrupt-michael-barone
http://www.teaparty.org/article.php?id=376
http://www.newsmax.com/InsideCover/Jeb-Bush-Gingrich-bankrupt/2011/01/27/id/384111
http://www.washingtontimes.com/news/2011/feb/3/gop-plan-would-let-states-go-bankrupt/?page=all